Best Buy CEO Admits They'll Probably Screw Up Digital TV Switchover

By cwaltersJanuary 10, 2008

Well, at least he’s being honest—Best Buy CEO Brad Anderson announced at CES today that the 2009 switchover from analog to digital television (still a year away) poses “one of the biggest risks our industry has,” whatever that means. “The number of converter boxes that is going to be required could put tremendous pressure on us.” Oh, you mean because you’ll have to have them in stock? Interpretation: if you’re going to need a converter box or two, you’d better plan on buying them elsewhere.

Target and Circuit City, on the other hand, were acting almost as if they’re in the business of consumer electronics and looking forward to the transition as a selling opportunity. Weird.

Executives with Circuit City and Target agreed the digital TV transition is fraught with challenges.

But the transition presents opportunities as well, says Steve Eastman, vice president and general merchandising manager for consumer electronics at Target. The analog-to-digital switch will get people thinking about high definition and what technology is in their homes, he says.

I dont think they are scared. I think its more like if there are 14.3 million Televisions that will need the boxes they will need to manufacture that meny. If you go to the Nintendo school of supply and demand you see they make 1.8 million Wiis a month and are impossible to find. Demand for these boxes will be high and supply will probably be low. It would be scary for old granny whose TV went black and she cant watch her soap operas because she cant find a converter box anywhere and she is told she needs a new TV.

Well, they aren’t exactly lying at the moment. Right now you almost have to buy a new television. The digital tuner selection is almost non-existent. When you can actually walk into a store and find a few, preferably coupon eligible, tuners I’ll agree with your proposition. Until that happens, though, the easiest way to get the appropriate technology is just to buy a new television.

@reasonsnotrules: I don’t know about other people, but I’m just planning on turning the TVs off when/if this happens. If I end up buying a “converter box”, it’ll be one of those nice free-to-air satellite receivers and I’ll watch the NY/LA feeds of the networks instead. Other than House and CBS’ Sunday Morning, there isn’t anything on terrestrial television that I watch.

“Target plans to have converter boxes in stores by April.”
That’s a good one.
I saw analog TV sets for sale in a Target two weeks ago!
But they did have the required warning label, in tiny print, though.

it only affects over the air broadcasts right? not cable, not satellite (minus those who dont get local channels) so you can eliminate those people. Then everyone who already has upgraded to highdef (minus early adopters who bought monitors only, but if theyve gone this far sans tuner, do they need one now?)

@endless: Still about 14 million households we’re talking about. I would assume we are talking about the poorest segment of the populaion and people who just don’t subscribe to cable/satellite, don’t have internet, and are in that 10% that still doesn’t have a DVD player.

How are they going to handle the coupon expiration date? If the coupon is good for 90 days and there’s not a box to be had in that time period – will the expiration date be extended? Will they send new coupons out or will we be reading story after story about some manager at BestBuy refusing to accept “expired” coupons and trying to talk Granny into an “upgraded” converter (that can’t be purchased with the allegedly expired coupons?)

One thing I am worried about is where & when will these converter boxes be available? (only at “approved” places?)

There is going to be a serious run on these as soon as they ARE available…. because everyone has already (or will be in the next month or so) ordered the coupons for the boxes. The coupons are only valid for 3 months…. so the first three months boxes will be available…. people are going to be scrambling to get them. I wonder if the electronic companies producing them even have them already made or not? If not…. then all hell is going to break loose when there are too few boxes to sell to people with expiring coupons.

P.s. I can just see it now….. average customer goes into best buy to get their converter box & salesman says “oh we ran out & dont plan on getting any more, but you can easily just buy this brand new compatible TV right here!” (*sales commission*) ….. while there is a giant stack of the converters still sitting in the back warehouse.

I had a miserable POS salesman try this when I went to buy my first (and only) satellite cablebox ….. they had a ton of RCA branded ones on the sales floor & the Hughes electronics ones were in the back. THE SOB salesman was trying to get me to buy an RCA & when I refused & stated I wanted the Hughes. Then when I was about to leave…. he said “Let me go check in the back”. Big suprise that he “found a pallet” of them in the shipping area…. MY FAT ASS!.

I don’t think this says you better plan on buying them elsewhere. I used to work at Best Buy, and yes, we never had anything in stock.

But this transition is going to be a mess, considering it’s a year away and nobody’s seen a box yet. Grandma doesn’t even know that her shows are going to be switched off in a year unless we pick up the box for her.

I think “at least he’s being honest” is the key line here. It’s a reasonable assessment of the impending chaos.

p.s. I was working in the Video department 5 years ago. We were talking about set boxes back then when the Digital TVs were just being starting to be sold at Best Buy. The line to customers who didn’t want to fork over extra cash for the then-expensive Digital TVs was that they’re buying a short-term investment that’ll need a converter box in a few years. (We downplayed the part that we were selling them “HD Ready” TVs, which also needed a box for digital TV.)

It’s mildly surprising to me that the boxes are indeed turning out to be a last-minute release when its been an issue for so long.

p.p.s. I bet we’ll find out how many people need them on February 18th – 19th, 2009, for a large segment of people who will wait until the day before or find out the day of. Like Christmas shopping.

@forgottenpassword: There is no sales commission at Best Buy, only brainwashed sales people who will do that anyway. See Circuit City for commissioned sales. Also RTFA and you’ll get the answer to your question about approved retailers. There are 250 so far.

criticize a company for being honest? No matter what, Best Buy will be #1 in line for the converter deliveries, as the biggest seller of consumer electronics and televisions in the country (yes, bigger than Wal-Mart) and get the best allocations. Won’t be their fault if they cant keep up with the demand.

@MickeyMoo: That is probably the real reason Best Buy is claiming they can’t do this. If they are perpetually out of stock during the time frame the coupon is valid they can sell more TVs.

When we were looking for a new TV this summer the sales people at Best Buy kept trying to unload analog TVs on us as digital. When we pushed them to show us where it said on the technical details of the TV that it was digital they suddenly had something important to do in the stockroom. They were caught by the FCC doing this at other locations. So I have no doubts they will have a manufactured converter box shortage. They probably have a higher margin on a TV than a converter box.

@jsumners: Agreed. But that was the marketer’s plan. Didn’t everyone else read in the mid 90’s and early oo’s that the US economy was looking forward to a big boost due to everyone needing to buy new TV sets? Lots of people were upset the longer the transition to digital took. They were missing out on getting their money, NOW!

If things were run in a more eco-friendly way the digital converters would have been offered years ago and the public wouldn’t have been misled into thinking they could only get digital signals with a new TV. Think of all of the usable TVs (many only a few years old) that were junked in order to upgrade to digital. The upcoming problems were all part of their business model from the beginning.

FYI: If there’s not converter box available when you need it and you don’t want to buy a $600 or $1000 TV, then look for a DVD recorder that can handle digital. It will need to have coaxil connections in the back for your analog TV. But right now you can get one for something south of $300.

Best buy is just confused because they can’t figure out how to put an extended warranty on a converter box, or where the overpriced cables should plug in. Circuit City has figured these things out already.

@cooltidbits.net: Hey, we don’t have cable or satellite, but it’s a lifestyle decision. I a) object to paying for television that comes with commercials anyway and b) don’t want TV to be that important in my life. (And when the Discovery Channel suite of channels comes into my home, TV sadly becomes that important in my life. Discovery Health is like crack to me.)

(And yes, we have high-speed internet and a DVD players, so :P )

We’ll get a converter box for one TV (like to watch network primetime sometimes, and like to get local news sometimes) and let the others just stay analog and run peripherals.

We’ll probably get a new TV at some point not long after the switch, but mainly because we want a flat-screen to hang on the wall so it’ll take up LESS space (and therefore less focus) in our life. Otherwise we’d just use the converter box until the existing TVs died, I think.

We have several professional friends who’ve made the same decision (not to have cable or satellite), typically for similar reasons, that they feel TV is too big a focus. Many also have the added reason of wanting to keep TV’s allure to a minimum for their children. Most are very tech-savvy.

Maybe the CEO of Best Buy should concentrate on customer service, not ripping customers off and their own problems instead of speculating about the government doing things wrong. We already know the government will probably fail, like it does with everything else; but if Best Buy could provide me with correct prices, superious customer support and great products in stock I might forget about how crappy the government is doing.

@forgottenpassword: “One thing I am worried about is where & when will these converter boxes be available? (only at “approved” places?)”

The boxes themselves can be available anywhere; I read there are 14,000 approved outlets where they will take your voucher for one of two basic models. Best Buy, CC, Target, and Wal-Mart are among the chains with “approved outlets.”

I’m another tech-savvy person who has chosen not to watch TV much. I haven’t watched TV on TV (as opposed to online) for almost a year. (And even online, it’s been months). Instead, I read those packets of paper known as “books.”

We will be needing these boxes for someone else in my family though. But even she just watches a few network shows, not cable. Cable/satellite is NOT a necessity, no matter what you may think.

So…given the general shortage I’m sure will occur for the 90 days after they start giving these out…Is it better to apply now, or better to wait? Waiting runs the risk of the government running out of money…But we’d qualify under the “no cable/ satellite” group of people.

According to a (second sourced) source ([answers.google.com]) there were some 219 million television sets in the United States as of 1997. That number is now 11 years old, of course. But there is no reason to believe that, with the increase in population since that time, the number of TV sets in the U.S. hasn’t gone up as well.

According to the ([www.dtv2009.gov]) website, the U.S. Government is willing to provide, free of charge, two coupons worth $40 dollars each to each American household. Those coupons can be used towards the purchase any of 25 different approved models of digital converter box.

I’m going to guess that some of those approved converter boxes will be priced at or slightly above the value of the coupons.

Bearing that in mind, over the next year, consumer electronics stores will have to keep those converters in stock for the more than 219 million estimated (1997 estimate) television sets in the United States. And they will have to ensure they don’t over purchase the converters so they don’t go bankrupt in the process. And they’ll be selling the converters to consumers who will be spending coupons, not cash — the worst kind of consumer.

I’d say that’s a logistical challenge for even the best of retailers, even for Best Buy — everybody’s favorite whipping boy.

I don’t see this as a valid complaint. The fact that Best Buy can’t keep up with demand has nothing to do with incompetence or malice of any failing of customer service, which are the things we should be complaining about.

If Best Buy doesn’t have what you want because that thing is in high demand, it doesn’t make them ‘sucketh.’

I don’t know why this article is attacking best buy…other then this sites silly retarded vendetta with them.

Actually +1 to Best Buy for this…they are being realistic…

Last time I checked Best Buy, Target and Walmart don’t make products in the back of the store, they just sell what gets shipped over from china…

Also last time I checked whenever something comes out that a huge number of people need it sells out and people get pissed.

Wal*mart is going to be the ones in a real problem, since they tend to be located in the poorer areas where there are going to be higher densities of people needed these boxes (as well as higher densities of people who won’t even understand why there TV just blacked out one day).

you know what, if you go into best buy, they are sold out of the boxes and they try to sell you a new TV…what wrong with that?! it is a RETAIL STORE they are there to SELL THINGS…jesus, what…you want to go into best buy and get free stuff and walk out? Go to the library if thats how you feel going into a store…retards